Elon Musk Talks About a $20,000 Tesla

This is the recurring debate when it comes to Tesla and its expansion into deep America. 

Can the Austin, Texas-based automaker offer a model whose price could convince a large number of consumers to buy an electric vehicle? Basically, when is Tesla going to manufacture a low-cost vehicle that could allow it to target the 80% of American consumers that the group does not reach?

On the group's Investor Day on March 1, many analysts had speculated that Elon Musk, the group's whimsical and charismatic CEO, would unveil a Model 2, that is, a $25,000 Tesla car.

On that day, the carmaker revealed no new passenger vehicles. The last time Tesla unveiled a new vehicle was in November 2019 and it was the highly anticipated Cybertruck, its very first pickup truck. 

Since then, there has been nothing, and the wait has been long. A Model 2 could have enabled Musk's group to reach a large consumer segment in the West and to conquer emerging countries. Musk and Tesla would have delivered a blow to their rivals. 

Since then, Tesla and Musk have seen rivals unveil low-cost electric vehicles. On March 15, Volkswagen  (VWAGY) - Get Free Report unveiled an electric vehicle, priced at less than 25,000 euros ($26,400). The German juggernaut called this concept car the ID. 2all. The version that will be available to the public will be produced from 2025. 

A month after Volkswagen's big news, BYD  (BYDDY) , Tesla's Chinese rival, unveiled the Seagull, a $11,000 electric vehicle, making it by far the cheapest EV currently on the market.

Tesla  (TSLA) - Get Free Report has, however, found a way to make its cars more affordable. This year, the company has lowered prices several times, so the Model 3, Tesla's entry-level vehicle, costs $40,240. Consumers can buy it for much less once they subtract the $7,500 federal tax credit available since January in the United States, a Twitter user noted on June 8. The user added that it was even possible to purchase this sedan at $20,000 in certain states which offer additional discounts.

'Extremely Rare'

"The general public still think that Tesla’s are very expensive," the Twitter user posted. "With tax incentives they are getting below 30,000 and then some states you can get a Tesla for 20,000 with tax incentives. This is truly mind blowing, and the best time to get a Tesla."

Faced with this comment, Musk intervened to reframe things somewhat and in particular on the fact that it was possible to afford a Tesla for $20,000. For the billionaire, we are still far from it. But he believes that the various incentives for clean vehicles and the price actions taken by Tesla make the group's cars affordable for a large number of consumers.

"Qualifying for the ~$20k car is extremely rare," the Techno King, as he's known at Tesla, commented, clearly stating that the possibility for a customer to buy a Tesla car for $20,000 was very limited. "But the $7500 credit applies to the vast majority of electric vehicle buyers (across all manufacturers)."

Last month, Musk announced that Tesla would start advertising to educate the public about the prices of Tesla cars. In addition, it is necessary to educate consumers on Tesla features, Tesla products and the technological innovations of the company, which, the tech mogul claimed, are advanced on artificial intelligence, compared to Google's Waymo, for example. 

Musk added that advertising Tesla products will also allow the carmaker to reach new audiences, as Tesla aspires to produce tens of millions of vehicles per year.

"We'll try a little advertising and see how it goes," Musk told shareholders during the annual meeting.